top of page
Search

Spotify: Music's SAAS transformation is complete

  • Writer: Abacus Research
    Abacus Research
  • Mar 25, 2019
  • 1 min read

Spotify is definitely not for everyone, given high churn and competition from Apple, Google and Amazon it is very easy to put it in the "ignore bucket" as downside protection is almost zero. If you want to be negative, it is easy to find reasons to be negative. 


We think this is the wrong decision, the industry background is too compelling, but it is going to be a bumpy ride. 


We find the industry attractive, music's SAAS transition is complete and music labels and Spotify have fully aligned interests in ensuring the success of streaming.

  • The main bet is that streaming wins, and Spotify is one of the key players.

  • Spotify’s has a dominant position, and we don’t see this changing. Ad-supported streaming is a competitive advantage.

  • Longer term, the industry has pricing power and the structure to apply it. Limited to no pricing power is captured in the valuation.

Potential Upside: $265 (+90%) over 5 years.

There is no downside protection in our opinion.


 
 
 

Recent Posts

See All
Brookfield (BN):

We initially wrote up BN in Jan 2024, it has increased 70%, so why mention it again? Firstly, we think the fundamentals are as good now as they were 2 yrs ago, with a >15% IRR on offer. BN is not a we

 
 
 
Figure (FIGR)

We believe Figure is highly disruptive. If tokenisation of real-world assets is a theme for the next decade, FIGR could be at the centre of it. Figure has found a real-world use for blockchain, provin

 
 
 

Comments

bottom of page